Thanks to a recent acquisition, Dixon...

GROWTH STOCK.

June 22, 1987|By Suzy Hagstrom of the Sentinel staff

GROWTH STOCK. Thanks to a recent acquisition, Dixon Ticonderoga Co.'s profit and revenue will rise substantially during fiscal 1988, according to Raymond, James & Associates Inc., a regional brokerage in St. Petersburg.

In a recent research report, Raymond, James stock analyst Jeffrey Berg predicts that Dixon Ticonderoga's profit will rise to $3.3 million, or $2.10 a share, for the fiscal year that ends Sept. 30, 1988. That compares with an estimated $2.4 million, or $1.55 a share, for fiscal 1987. Revenue will rise to $73 million in fiscal 1988 from an estimated $66 million in fiscal 1987, he predicts.

Dixon Ticonderoga, which is based in Vero Beach, makes crayons, pencils, pens and other writing products. The company also makes moldings for manufacturing purposes and is developing some condominiums south of Vero Beach. Dixon Ticonderoga refines and blends graphite and owns two graphite mines in Texas and New York.

Last December, the company paid $4.7 million for David Kahn Inc., a manufacturer of pens and desk accessories in Deer Lake, Pa.

Although David Kahn has suffered from losses, management changes, lack of capital and sharp revenue decreases, according to Berg, its product name, Wearever, has been well-known for a century.

Berg believes that Dixon Ticonderoga paid a reasonable price for David Kahn and that the new subsidiary's headquarters and manufacturing plant in Deer Lake will be a worthwhile asset. To reduce manufacturing costs, Dixon Ticonderoga has moved its production from Vandalia, Mo., to Deer Lake, which will become a distribution point for the Northeast.

Dixon Ticonderoga also will benefit from David Kahn's tax credits and tax loss carryforwards, Berg notes.

''Dixon believes it can bring production at Wearever up to $10 million (in revenue) in fiscal 1988, without any significant increase in overhead,'' Berg writes. ''The successful integration of the Dixon and Wearever product lines couple with penetration of the mass market should allow for steady revenue growth over the next several years.''

Last year, David Kahn's revenue was $3.9 million and its loss was about $400,000. David Kahn's operations became profitable in May, according to Gino N. Pala, Dixon Ticonderoga's chief executive officer.

''As the company continues its restructuring of divisions, product lines and the balance sheet, a profitable, growing consumer products company, operating in recession-resistant markets, should emerge,'' Berg writes. ''Accordingly, we continue to recommend purchase of these shares.''